Facing up to the challenges of austerity

While the Health Service may be protected from the worst of the public spending cuts that are due to be implemented over the coming years, it has been made clear that some savings will still have to be made. Furthermore, the burden of regulatory compliance is not likely to diminish and in some areas, including those related to energy and climate change, the expectations are almost certain to increase over the coming 18 months.

The coalition government, as well as other administrations across the European Union, is currently calling for a tightening of the targets for emissions reductions. The argument goes that, post-recession, the cost of achieving a 30 per cent cut against 1990 levels is not much more than that of a 20 per cent cut proposed before the recession began. The 20 per cent target was always ambitious; a 30 per cent figure is going to be hugely challenging – and the public sector will be expected to take a lead. Indeed, the leading role of the public sector is clearly set out in several of the energy-related directives approved by EU lawmakers in recent years.

While new targets may take a while to filter down from European level to the UK domestic agenda, others are already in the pipeline. Importantly, the revised Energy Performance of Buildings Directive (EPBD) has to be “transposed” (in official terminology) into UK law by July 2012. The EPBD legislation encompasses such elements as Energy Performance Certificates (EPCs), Display Energy Certificates (DECs) and the Building Regulations.

DISPLAY ENERGY CERTIFICATES
One area of immediate relevance to the health sector is a tightening of regulations on the application of Display Energy Certificates. These are currently required for all buildings with more than 1,000m² of useable floor space that are owned by publicly-funded organisations and frequently visited by the public.

Two changes are included in the recast of the Directive. First, DECs are being extended to include private sector buildings and secondly the 1000m2 threshold is being reduced in two stages to 250m². That means that virtually all health sector buildings open to the public, from both public and private sectors, will have to produce DECs every year from July 2015 (and January 2013 for buildings of more than 500m².

Now in theory, Display Energy Certificates are relatively easy to produce – much more so than Energy Performance Certificates (EPCs). This is because they are essentially a record of how efficiently a building is being run and so rate the annual energy consumption against a benchmark figure for the type of building (no long searches for building plans in order to compile an asset rating for an EPC). Clearly, the essential data are accurate meter readings for energy consumption. Conversion factors to arrive at emissions levels and benchmarking figures are standard terms.

In practice, though, they typically require a great deal of time for engineers and energy managers who have to read the meters, validate billing information, complete the calculations and produce the reports. With the revised Directive extending the reach of the DEC regulations to almost all buildings, a solution needs to be found over the coming months that streamlines the collection and processing of this information – otherwise the task will become a great deal more cumbersome very quickly. And the growth in the volume of reports that needs to be completed also raises the issue of guaranteed data quality and consistency. As DECs are legal requirements, finding such a solution is urgent.

The arrival of automatic Monitoring & Targeting systems (aM&T) over the last few years has proved an effective way for organisations with a variety of sites and/or processes to adapt to increasing demands in terms of quality and quantity of information. The latest aM&T systems will even produce DECs automatically – and that must surely be attractive to the hard-pressed energy and facilities manager. However, although the costs of these systems are coming down, driven both by a continuing fall in the cost of electronic components and also the increased numbers in which these systems are being sold, they still cost money and that may not be readily available. It should be noted, though, that all the evidence shows an attractive payback period for investment in this technology.

A SYSTEMATIC APPROACH
One thing that aM&T provides is a high degree of consistency of reporting. Yet this can still be achieved with less reliance on automation. The recent launch of a European standard for energy management provides a means for establishing a common framework across the UK. EN 16001 is the product of negotiations between the member states of the EU. Several members of ESTA represented UK interests on the technical committee.

This standard outlines a common framework within which to position energy management procedures and technologies. The new standard will provide a common template for reporting and evaluating performance. For public sector organisations, the ability to compare and contrast across the whole sector has an obvious appeal.

This platform will also make it simpler to exchange best practice – and there is a great deal of this around which can be adopted, adapted and exploited for specific circumstances. As EN 16001 becomes better known (it was only launched a few months ago), systems and services providers will link in to it.

Importantly, the standard ushers in a new, systematic approach to the management of energy, bringing together all the processes, procedures and responsibilities that may sometimes seem only superficially connected. It will therefore be a powerful tool for coordinating both energy efficiency campaigns and proposals for further investment. As it is based on existing management systems standards such as ISO EN 9000 Quality Systems and ISO EN 14001 Environmental Management Systems, the structure will be easily accessible to other parts of an organisation, which will make it easier for energy professionals to explain and justify their proposals.

THE CRC ENERGY EFFICIENCY SCHEME
Most larger organisations in the health sector are currently getting to grips with the CRC Energy Efficiency Scheme, which involves not only carbon trading but also league tables for energy performance. This league table will have on-going financial implications for participants. A robust, structured framework such as EN 16001 will make the tasks of forecasting expenditure on emissions allowances, reporting and reconciliation much easier.

For the first couple of years, early action metrics will play an important part in league table position. The two qualifying measures are (a) the installation of aM&T and (b) formal membership of a scheme that provides for continuing improvement in energy performance. Until recently, only the Carbon Trust Standard (formerly the Energy Efficiency Accreditation Scheme, developed originally by ESTA) counted under the second metric, but BSI has now launched a Kitemark scheme based on EN 16001 and the government has approved this as an equivalent, and therefore equally acceptable, scheme. We believe that giving organisations a choice about the route they take to demonstrating continuing improvement can only be a good thing.

In the first few years at least, the costs associated with carbon will be small compared with the overall energy bills. When full market trading comes in, that may change, depending on how aggressively the carbon agenda is being pursued.
 
CAPTURING BEST PRACTICE
Two further initiatives should soon help health sector managers to optimise performance by encouraging the sharing of best practice. An international standard on energy auditing is currently being developed. Within the EU, the UK is widely recognised as having taken the lead in developing energy audits; hence several ESTA members are involved in drafting this standard.

Unlike EN 16001, which does not have global reach (the USA has been drawing up its own version and any eventual ISO standard will have to take both into account), the European committee is working closely with its American counterparts to achieve a common auditing process that will work on both sides of the Atlantic – and well beyond. We hope that the auditing standard will be in place within the next couple of years as this will allow users to commission energy audits knowing the standard, consistency and quality they can expect.

Ultimately, though, we all need to know that the savings we are making are accurate and that the methods used for assessing and quantifying these savings are robust. Equally, when examining the claims for projected savings made by suppliers of products and services, it is important to have some way of validating those claims.

One method, developed primarily for the evaluation of service delivery contracts in the USA and then introduced into continental Europe, is called the International Performance Measurement and Verification Protocol (IPMVP). It provides a standard format for identifying and confirming savings that result from the installation of specific products or even from a project involving multiple systems (such as a new energy centre).

ESTA believes that such a system will give energy users confidence in the figures for projected savings offered by suppliers of energy-efficiency products and services. It is therefore taking a leading role in the introduction of the scheme to the UK. One of ESTA’s members, powerPerfector, is already using IPMVP to quantify the effectiveness of its services and we expect this to become a widely adopted evaluation technique over the coming years.

FUNDING PERFORMANCE IMPROVEMENTS
Despite energy efficiency improvements traditionally offering rapid payback and excellent value for money, they have rarely if ever been among the top investment priorities for most organisations. With the expected cutbacks on spending, funding will be even scarcer.

Before abandoning projects in the face of a refusal from the finance department, it is worth looking at some of the other routes to funding. There are still grants available from central government for energy audits and for some renewable energy projects.
But there are also a number of well-established Energy Services Companies (ESCOs) and Contract Energy Management (CEM) providers. Provided schemes meet their acceptance criteria, they will provide the necessary plant, equipment and (often) staff to achieve the savings. Payment is through either a service fee or through an arrangement whereby money saved by the investments is shared between provider and client.

For the in-house facilities manager, this provides a way of accessing both funding and specialist expertise without incurring up-front costs. And in terms of risk, the health sector represents one of the more secure sectors with which to work.

We are moving into a period of austerity so savings will be increasingly important, especially given the continuing priority the government is giving to climate change. There are still opportunities to achieve greater efficiency, lower emissions and cuts in energy consumption. However, realising them may require greater use of all the various resources available to the energy and facilities manager.

The Energy Services and Technology Association (ESTA) represents over 100 major providers of energy management equipment and services across the UK.

FOR MORE INFORMATION
Web: www.esta.org.uk